Centuria Industrial Reit · ASX:CIP
Centuria Industrial Reit — 360 Capital Industrial Fund — FY2014 Earnings Presentation
38 slides from Centuria Industrial Reit's earnings presentation, Aug 21, 2014
Slide 1: 2014 Full Year Financial Results Presentation
360 CAPITAL INDUSTRIAL FUND ARSN 099 680 252 2014 Full Year Financial Results Presentation | 21 August 2014 1 Ashburn Road, Bundamba QLD (API) 1
Slide 2: Table of contents
Table of contents Section Appendices 1 Highlights A Balance sheet 2 Key achievements B Profit and loss statement 3 Results overview C Operating earnings reconciliation 4 Portfolio overview D Price Performance 5 Post period activity E Pro forma balance sheet 6 Capital management F Portfolio metrics 7
Slide 3: Highlights
1 Highlights P Total FY14 Unitholder return of 17.3% pa and 27.6% pa since listing1 P Operating earnings per unit of 20.6 cpu in line with guidance P Distributions per unit of 18.6 cpu in line with guidance and an increase of 3.3% on pcp P Gearing reduced to 42.1% from 45.5% in pcp and significant f
Slide 4: Key achievements
2 Key achievements • 96.2%1 occupancy Underlying • 5.3 years WALE2 (increased to 6.1 years post period) portfolio driving • 75,093sqm leased (22% of the portfolio) with an average term of 3.9 years results • No single FY15 expiry represent >2.0% of portfolio income • Portfolio values increased by 10
Slide 5: Key achievements
2 Key achievements • Operating EPU in line with guidance Strong financial • DPU up 3.3% on pcp results • Conservative payout ratio of 90% • NTA per unit increased from $1.94 in pcp to $2.21 per Unit • FY14 tax deferred component - ~45% • Market capitalisation increased to $204.0m from $190.1m in pcp
Slide 6: Results overview
3 Results overview • Statutory EPU impacted by recapitalisation (FY13), one-off items on listing (FY13) and valuations (FY14) FY14 FY13 Change Statutory net profit $41.9m $13.6m 208% • FY14 operating earnings up 73.0% due to • higher property income through acquisitions Statutory EPU 45.0 cpu 25.1 c
Slide 7: Portfolio overview
4 Portfolio overview Leasing Activity • 82% tenant retention1 • Proven ability to pre-emptively deal with significant medium term lease expiries leads to greater earnings visibility: FY14 Leasing Activity Tenant Address Area (sqm) Term (yrs) Rent ($’m pa) GM Holden 12-13 Dansu Court, Hallam VIC 15,3
Slide 8: Portfolio overview
4 Portfolio overview Current vacancy • Current vacancy limited to three core buildings Address Area (sqm) Rent ($ psm) Vacant since 5-9 Woomera Avenue, Edinburgh Parks SA 10,580 60 Dec-13 6 Albert Street, Preston VIC 1,067 66 Jul-14 102-128 Bridge Road, Keysborough, VIC 407 70 Feb-14 102-128 Bridge
Slide 9: Portfolio overview
4 Portfolio overview Disposals • $13.9m of non-core asset disposals: • 40-48 Howleys Road, Notting Hill VIC: $9.3m in Oct 13 • 223-235 Barry Road, Campbellfield VIC: $4.6m in Apr 14 • 5-9 Woomera Avenue, Edinburgh Parks SA: $4.5m is held for sale with terms agreed and under due diligence • Proceeds
Slide 10: Post period activity
5 Post period activity Wyong Regional Distribution Townsville Distribution Centre, Greens Biscuits Facility, Carole Centre, Warnervale NSW Townsville QLD Park, QLD Price: $69.8m Price: $9.6m Price: $23.9m Building area: 54,533sqm Building area: 4,726sqm Building area: 18,613sqm Net income: $5.8m p.a
Slide 11: Post period activity
5 Post period activity Acquisitions • Acquisition of two properties fully leased to Woolworths on 7.5 year average WALE with fixed 2.5% annual rental increases for $79.4m in Jul 14 • Funded through a fully underwritten $61.0 million capital raise comprising: • a placement to institutional investors
Slide 12: Post period activity
5 Post period activity Acquisition rationale • Quality assets with long term leases to strong covenants providing long term stable income • WALE1 increased from 5.3 years to 6.1 years • Increased liquidity, broadening of the register and increased market capitalisation of $279.1m2 • Underpins FY15 f
Slide 13: Post period activity
5 Post period activity Portfolio lease expiry profile (by income)1 50% 42.8% 40% 30% 20% 17.3% 10.9% 10.5% 7.8% 10% 3.9% 4.6% 2.2% 0% Vacant FY15 FY16 FY17 FY18 FY19 FY20 FY21+ Major pending expiries FY15 & FY16 • No major lease expiries until H2FY15 with no single FY15 expiry representing more than
Slide 14: Capital management
6 Capital management Debt facility summary1 • Existing NAB debt facility extended to 31 Jul 17 • Facility limit increased to $230.0m • Facility to be drawn to $207.7m • New $185.0m interest rate swap for three years entered into as part of the facility extension • All-in debt cost of 4.5% p.a. • LVR
Slide 15: Strategy
7 Strategy Provide consistent and growing income returns and capital growth from a diverse portfolio of industrial assets owned by a Trust with a simple capital structure Acquisitions, disposals and portfolio Capital management Philosophy management • Continue disciplined approach to • Recognise low
Slide 16: Outlook
8 Outlook Market • Capitalisation rates to firm continuing to drive TIX’s NTA per unit growth • More acquisition opportunities expected in FY15 albeit more market players in industrial space now • Increase in pre-commitment activity may provide fund through opportunities Operational • Opportunistic
Slide 17: Questions
Questions 2 Woolworths Way, Warnervale NSW (Woolworths) 17
Slide 18: Appendices
Appendices Section 1: Key achievements 22 Hawkins Crescent, Bundamba QLD (API) 18
Slide 19: Balance sheet
A Balance sheet 30 Jun 14 30 Jun 13 Balance Sheet ($’000) ($’000) Assets Cash and cash equivalents 5,749 4,820 Trade and other receivables 1,830 1,608 Investment properties held for sale 4,500 28,700 Investment Properties 353,800 312,000 Total Assets 365,879 347,128 Liabilities Trade and other payab
Slide 20: Profit and loss
B Profit and loss 30 Jun 14 30 Jun 13 Operating Profit & Loss Statement ($’000) ($’000) Rental income 37,269 35,573 Finance revenue 150 233 Total Income 37,419 35,806 Investment property expenses 7,490 7,158 Management Fees 2,335 2,292 Other expenses 512 106 Finance costs 7,911 15,158 Net Operating
Slide 21: Operating earnings reconciliation
C Operating earnings reconciliation 30 Jun 14 30 Jun 13 Operating earnings reconciliation Change ($’000) ($’000) Statutory net profit 41,940 13,636 208% Net gain / (loss) on fair value of investment properties (24,416) (992) 2,361% Net (gain )/ loss on fair value of derivative financial instruments
Slide 22: Operating earnings reconciliation (cont.)
C Operating earnings reconciliation (cont.) Amortisation of Amortisation of One-off legal Statutory net Rent Straight leasing fees borrowing FV gain on FV gain on Gain on sale of fees on change Operating profit Lining and incentives costs properties derivatives properties of custodian Earnings 45.0
Slide 23: Price performance
D Price performance S&P/ASX 300 A-REIT Portfolio valuations inclusion April 2014 $2.40 +8.3% Unit buy-back announced $2.20 +5.9% $2.00 $1.80 FY14 17.3% Total Return $1.60 27.6% Total Return pa since listing $1.40 Jul-13 Jan-14 Mar-14 May-14 Sep-13 Nov-13 TIX S&P / ASX300 REIT (rebased) NTA Source: M
Slide 24: Pro forma balance sheet (post period)
E Pro forma balance sheet (post period) Pro-forma 30 Jun 14 Adjustments Pro-forma Balance Sheet 30 Jun 14 ($m) ($m) ($m) Assets Cash and cash equivalents 5,749 5,749 Trade and other receivables 1,830 1,830 Investment properties held for sale 4,500 4,500 Investment Properties 353,800 103,270 457,070
Slide 25: Portfolio metrics (post period)
F Portfolio metrics (post period)1 Portfolio Snapshot Top 10 Tenants Rent ($m) % total Expiry Number of Assets 21 Woolworths 6.6 16.8 Jul-21 Net Building Area (sqm) 411,935 The Reject Shop 2.9 7.6 Feb-20 Property Value ($m) 461.6 API 2.9 7.6 Nov-24 WACR (by income) 8.5% AWH 2.8 7.3 Jul-19 Occupancy
Slide 26: Portfolio metrics (post period)
F Portfolio metrics (post period)1 Rent review profile (by income) Lease expiry profile (by income) 50% 42.8% Fixed 82% 40% 30% 20% 17.3% 10.9% 10.5% 10% 7.8% 3.9% 4.6% 2.2% No Review 0% CPI with Floor Vacant FY15 FY16 FY17 FY18 FY19 FY20 CPI FY21+ 5% 1% 12% Geographic diversification (by income) Te
Slide 27: Portfolio metrics: Top tenants
F Portfolio metrics (post period)1 Top 20 Tenants1 Notes 1. Pro-forma metrics as at 30 June 2014 including acquisitions of Warnervale, Townsville and Carole Park assets 27
Slide 28: Portfolio metrics: diversified portfolio by state
F Portfolio metrics (post period)1 Well diversified $461.6m portfolio Queensland (22% by income) • 1 Ashburn Road, Bundamba (The Reject Shop) • 22 Hawkins Crescent, Bundamba (Australian Pharmaceutical Industries) • 21 Jay Street, Mount St John Townsville (Woolworths) • 33-37 Mica Street, Carole Park
Slide 29: Portfolio metrics: property valuations
F Portfolio metrics (post period)1 Last Valuation WACR2 Area Occupancy3 WALE2 Property State Valued ($m) (%) (sqm) (%) (years) (date 1 33-37 Mica Street, Carole Park QLD 23.9 - 8.00 17,916 100.0 15.0 2 2 Woolworths Way, Warnervale NSW 69.8 - 8.25 54,533 100.0 7.1 3 Lot 69 Jay Street, Mount St John,
Slide 30: Industrial property outlook
G Industrial property outlook Past 12 months Next 12 Months Market Market Comment Comment Direction Direction • Financial and operational consolidation • Improvement in line with improvement in influencing decisions economic conditions and business confidence Tenant demand • Growth in transport & lo
Slide 31: Property details
H Property details 60 Marple Avenue, Villawood NSW 37–51 Scrivener Street, Warwick Farm NSW 8 Penelope Crescent, Arndell Park NSW The Property is located approximately 40 kilometres west of The property is located in the traditional industrial precinct The property is located at Warwick Farm, 31 kil
Slide 32: Property details (cont.)
H Property details (cont.) 54 Sawmill Circuit, Hume ACT 22 Hawkins Crescent, Bundamba QLD 1 Ashburn Road, Bundamba QLD Completed in 2010, the property is located in the industrial The property was completed in 2009 and is situated The property was completed in 2010 and is situated precinct of Hume,
Slide 33: Property details (cont.)
H Property details (cont.) 9-13 Caribou Drive, Direk SA 5-9 Woomera Avenue, Edinburgh Parks SA 102–128 Bridge Road, Keysborough VIC Completed in 2009, the property is located 25 kilometres The property is located within the suburb of Edinburgh, The property is located in the south-eastern suburb of
Slide 34: Property details (cont.)
H Property details (cont.) 500 Princes Highway, Noble Park VIC 6 Albert Street, Preston VIC 14-17 Dansu Court, Hallam VIC The property is located in the traditional industrial precinct The property is situated within the established south eastern The property is located on the north side of Princes
Slide 35: Property details (cont.)
H Property details (cont.) 12–13 Dansu Court, Hallam VIC 33-59 Clarinda Road, Oakleigh South VIC 39–45 Wedgewood Road, Hallam VIC The property is situated within the established south eastern The property is situated approximately 17 kilometres south- The property is situated within the established
Slide 36: Property details (cont.)
H Property details (cont.) 310 Spearwood Avenue, Bibra Lake WA 457 Waterloo Road, Chullora NSW 69 Studley Court, Derrimut VIC The property is located within the established Bibra Lake The property comprises a recently refurbished traditional The property is a modern freestanding office and warehouse
Slide 37: Property details (cont.)
H Property details (cont.) 2 Woolworths Way, Warnervale NSW Lot 69 Jay Street, Mount St John, Townsville QLD 33-37 Mica Street, Carole Park QLD The property is located on the Warnervale Business Park The property is located within the Webb Industrial Estate in The property is located in Carole Park
Slide 38: Disclaimer
Disclaimer This presentation has been prepared by 360 Capital Investment Management Limited (ACN 133 363 185, AFSL 340304) as responsible entity of the 360 Capital Industrial Fund (ARSN 099 680 252) (‘TIX’ or the ‘Fund’) . All information and statistics in this presentation are current as at 20 Augu
360 Capital Industrial Fund — FY2014 Earnings Presentation on 6ix